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Author Topic: Even a Billionaire couldn't buy the truck he wanted due to rarity and demand now  (Read 88 times)

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Offline theking

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Why a billionaire couldn't get the truck he wanted — then had to pay more for a used one

Soaring post-pandemic demand is so acute that even a billionaire is having a hard time getting the car he wants.

In a recent interview with Yahoo Finance, Jeffrey Gundlach, the founder and CEO of DoubleLine Capital, recounted how he's experienced the rising prices of used cars first-hand. Amid a worldwide semiconductor shortage that's hampered new car production and squeezed supply everywhere, the economic "distortions" put the wealthy bond investor in an uncharacterist ically tough spot.

"I actually bought a truck a couple of weeks ago. And the lot, the car dealer's a big car dealership, they had no new trucks. There weren't any," Gundlach recalled.

Because of the chip shortage, "all he had on his entire lot were used trucks," the investor added — meaning he had to settle for a used one.

According to Gundlach, the truck he purchased had 8,000 miles on it, but was only $2,000 less than the sticker price of a brand new truck.

"The fella who sold it to me, he claimed, and I think I believe him, that he was doing me a favor because he probably could have sold that truck — thanks to shortages — for more than the manufacturer's sticker price," he added.

Gundlach's anecdote is becoming more typical in a world where COVID-19 is still raging, but the U.S. economy is poised for record-shattering growth that's stoking the beast of inflation.

In fact, the price for used cars and trucks jumped a staggering 10.0% in April, and is up 21% in the last 12 months, according to the Bureau of Labor Statistics Consumer Price Index (CPI) data released on Wednesday.

Excluding food and energy, core inflation jumped 0.9% last month, the largest monthly increase since 1982. On a year over year basis, headline prices surged by faster-than-expected 4.2% in April, its largest gain since September 2008.

According to Gundlach, DoubleLine's model suggests inflation "is probably going to go higher in the next couple of months" and might peak in July.



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